Orbitz Worldwide's separate disputes with Kayak and American Airlines impacted the bottom line in the fourth quarter of 2010.
Barney Harford, Orbitz Worldwide president and CEO, pointed to a "disappointing" performance at U.S. brands Orbitz.com and CheapTickets, attributing part of it to reduced share from metasearch engine Kayak.
Orbitz and Kayak are involved in arbitration over the issue, with Harford alleging that Kayak is violating certain "exclusivity arrangements" on the way Orbitz information is displayed on Kayak.com. Harford said he expects an arbitration decision in the second quarter of 2011.
In turn, Kayak alleges that Orbitz breached their agreement "for failing to accurately report and account for net revenues under the agreement."
Meanwhile, Harford said Orbitz is "still feeling the impact" of losing American Airlines inventory, which accounted for 5% of Orbitz Worldwide's total net revenue in 2010. The airline removed its flights from Orbitz sites a few days before Christmas.
Addressing financial analysts during Orbitz Worldwide's fourth quarter of 2010 earnings call Feb. 16, Harford said the dispute has been a costly for both parties. He said Orbitz has recaptured about half of American Airlines' volume, and American has had to resort to "couponing" and other fare sale promotions.
During the fourth quarter, Orbitz Worldwide took an impairment charge tied to American's ending its charter associates agreement.
Orbitz Worldwide recorded a net loss of $78 million for the fourth quarter, compared with an $18 million profit a year earlier.
The company said the net loss "was due to non-cash goodwill and intangible asset impairment charges," including those related to American Airlines.
Harford pointed to some positives -- including ebookers and the Orbitz private label business -- in 2010.
ebookers gained air ticket market share and saw a 57% growth in hotel room nights in 2010, Harford said, laying part of the improvement to migrating ebookers to the Orbitz global technology platform.
In addition, the Orbitz private label business produced a 50% increase in room nights last year, Harford said, noting that it now powers hotels on the websites of several major U.S. airlines.
Orbitz plans to transition its HotelClub business and several U.S. brands to the global platform in 2011.
On other hot-button issues, Harford noted that Orbitz recently signed a long-term contract renewal with ITA Software, ensuring access to ITA's QPX airfare shopping and pricing platform through the end of 2015.
Harford said he's confident the U.S. Department of Justice review of Google's proposed acquisition of ITA Software would address any industry concerns.
Harford highlighted another Orbitz Worldwide positive development in 2010 -- a 30% increase in traffic from nonbranded queries [i.e. search engine queries that do not include Orbitz brands].
He said this is especially noteworthy given industry concerns about Google Places.
"In 2011, we are focused on strategic initiatives around hotel distribution including enhancing the hotel search and booking experience; expanding our mobile offerings; augmenting our ability to source a broad and deep range of highly competitive inventory from suppliers around the world; and completing migration of our consumer businesses to the global platform," Harford said.
Orbitz Worldwide's hotel net revenue increased 13% to $51.7 million in 2010, and hotel net revenue accounted for 28.35% of total net revenue.
Orbitz's hotel revenue growth was on par's with Expedia's 15% growth pace in 2010, although Expedia generates a much higher percentage of its overall revenue from hotels.